Australia's AGL, Senex Energy sign big gas supply deal

Posco International

16/06/2023 05:29

SYDNEY, June 16 (Reuters) - Australian gas producer
Senex Energy, owned by South Korean steel giant Posco
 047050.KS , has entered into an agreement to supply 42
petajoules (PJ) of gas to the country's top power producer AGL
Energy  AGL.AX , the companies said on Friday.
    The deal comes amid warnings this year from Australia's
energy market operator of long-term supply gaps for gas on the
country's east coast, and after gas producers said they were
reluctant to invest in new supply following government
interventions.
    "This agreement will add critical new supply to the domestic
market when it's needed most," Senex Energy Chief Executive Ian
Davies said in a statement.
    The gas deal, expected to begin in January 2025, is
conditional on the restart of a A$1 billion ($687 million)
expansion at Senex Energy's Atlas project in Queensland state's
Surat Basin, Davies said. The value of the deal was not
specified.
    The expansion was suspended in December after the Australian
government set a price cap on new wholesale gas sales by east
coast producers in a bid to reduce power bills for households
and businesses hit by soaring costs.    
    But the move was met with fierce opposition from the
industry, which said the reforms dealt a blow to the gas supply
and the country's future energy security, and will lead to
market chaos.
    Senex in August last year announced the expansion plans at
Atlas to raise its output to 60 PJ a year by 2025, before
shelving it after the government's decision on price caps.  
    The resumption of the expansion work at Atlas requires
approvals from the federal agreement and regulators.

($1 = 1.4550 Australian dollars)
    
    

 (Reporting by Renju Jose in Sydney; Editing by Kim Coghill)
 ((renju.jose@thomsonreuters.com; +61 29171 7126; Reuters
Messaging: @renjujose))